Authored by: Duan Tao (Daisy), Wang Yan and Li Cuishi
China has been granting an IIT exemption for expatriate individuals’ subsidies and allowances in kind, such as housing subsidies, food allowances, relocation fees, laundry fees, travel subsidies, family visit fees, language training fees, children’s education fees, etc.
With the implementation of the amended PRC IIT Law in 2019 and the introduction of the special additional deductions, it has been clarified that, from January 1, 2019, an expatriate individual who is a Chinese tax resident may choose to claim special additional deductions for IIT at a standard level, or to enjoy the aforementioned exemption policy for subsidies and allowances in kind, but is not allowed to claim the special additional deductions and the tax exemption incentive concurrently. The option chosen must remain unchanged within a tax year. It was previously supposed that the tax exemption incentive might expire at the end of 2023.